Thursday, April 1, 2010

If fuel prices go up will RV usage go down?

What would happen to your RV plans if the price of fuel were to rise dramatically?
In the Spring of 2008 I paid almost $5 a gallon to fill up my motorhome. I was not mentally prepared for the sticker shock at the pump. All my life a gallon of diesel fuel cost less than a gallon of regular gas. When I decided to become a full-time RVer and purchased a diesel pick-up to tow a mammoth 5th wheel, diesel prices switched places with regular gas overnight. I'm just lucky that way.

There were many reasons for the increased fuel prices in 2008. I discussed them in two articles at that time which you can read here: RVers wonder why diesel prices are so high and RVers could see fuel at $8.00 a gallon in 2009. Thankfully $8.00 a gallon didn't happen, and looking back, we see that speculators contributed significantly to the rising cost of fuel at the pump.During that time of high fuel prices we saw a pull-back in both auto and RV usage. Since most RV travel involves discretionary spending, RV usage was curtailed. Many RVers saved on fuel costs by restricting their RV travel and camping close to home. Others just stopped RVing altogether.

Hardcore RVers just had to bite the bullet and increase the fuel budget allocation. The big question is, at what price point will fuel costs be prohibitive for the majority of RVers?

There's been a lot of talk lately about "Peak Oil." I didn't pay much attention at first, but I kept seeing the concept crop up in economic reports. The basic idea of Peak Oil is that we have reached the zenith of oil production worldwide and soon demand will outstrip production. In other words, we are running out of gas! I hope this idea is not true and that we enjoy cheap fuel forever.

It does concern me, however, when even the Obama administration has publicly recognized the threat. Glenn Sweetnam, the Obama team oil market expert doesn't like to call it "Peak Oil," preferring the terminology "undulating plateau" instead. It's the same thing, but you know how politicians love to "sugar coat" problems with less threatening sounding labels. He is clearly worried about whether we have enough reserves and production left to power us into the future. You can read the complete article in Le Monde.

The chart below came from a Department of Energy round-table meeting last April and shows we are rapidly approaching the downside of oil production. The chart tells us that in five years we will need to fill the gap with at least 10 million barrels of oil production a day. To give you an idea of how much that is, Saudi Arabia (the top oil producer in the world) produces only 10.8 million barrels a day. How are we going to fill that gap? From where is the oil going to come for future use? Liquid sands? Coal gasification? New exploration? All expensive propositions.
Wherever new oil comes from it will be expensive because it will cost more to produce. This translates into higher prices at the pump.

RV implications: Plan for higher fuel costs in the future (if they don't materialize you'll have extra cash). If you are considering becoming a full-time RVer you better hurry and take advantage of affordable fuel prices while they last. If you want to keep RVing into the future consider lighter more fuel efficient RVs. Plan to stay closer to home on future RV vacations. Look for ways to offset fuel costs like utilizing free camping or reduced rate campground programs. Use the internet to shop ahead for the cheapest fuel sources along your route of travel.


Staying on top of the undulating plateau - Jim Twamley, Professor of RVing

7 comments:

Anonymous said...

All you can do is take advantage of the moment. We're taking our first long trip in 20+ years this summer. We have a diesel pickup and a large 5er now, which we've wanted for years. And we're going to use them. You don't live forever.

It'd be nice if fuel prices (diesel) had maintained their historical relationship, with diesel being less per gallon then regular, and diesel powered vehicles got the MPG they did before all the smog equipment, but as you mentioned, that's our luck.

Jeff Pelton

LiveWorkDream said...

Professor, thank you for pointing this out to your readers, many of which I'm sure are in denial about what's ahead. More people need to hear this from the mainstream. The radicals have bee screaming about it for years but nobody paid attention. Now, we're close to calamity and silly humans that we are still don't seem any closer to finding alternative ways to haul our rigs around.

My advice to anyone who wants to keep living the fulltiming dream is to get a diesel so that at some point in the future, you'll at least have the option of trying to make or buy home-brew fuel.

PapPappy said...

Fuel prices may limit how much fuel I can "budget" for a trip, and that in turn will limit how far we might be able to travel....but, even traveling a couple of hours away can be a wonderful experience for the family.

I remember the story of a Mass. man who got all his kids into the RV and to sleep...heading for Maine. In the morning, they woke to a new campsite, a lake, and other wonders of camping. They had a great time.....only to find out that they had traveled about 30 minutes from home (and not to Maine), so the message is, you can make your trip what you want from it....it doesn't have to be 1000 miles away.

Gas prices may have more of us thinking "outside the box"...and visiting local or in-state Parks....Have you seen all of them?

Bruce and Jenna said...

For fulltimers, fuel is just a small part of a total budget. The sky is not falling.

Wanna worry about something? Think about scarcity, rather than price.

Something bigger? Nuclear terrorism attacks in the US in the coming years. Then you'll wonder where you can go, rather than how much you'll spend.

Anonymous said...

There is no doubt the fuel prices will increase this summer.The reasons are the same as in the past,supply. We have the resorces to supply fuel to last us maney years,but thanks to some people in our own congres/goverment we are held hostage by mid east oil producers.Yes there will be an end to fuels as we know them now,but lets use what we have and develop new synthetic fuels and stop being held hostage by nations and people that dont give dam about us.

Ron said...

RON:
We all are getting it in the end by the govt/and oil companies for there is no real shortage at hand its only what they want us to believe.For you see there profits keep going up no matter how bad the economy is.When fuel prices where $0.10-$0.25 a gallon they were still at a profit.Joe public will never stop buying no matter what price it will be..Thank You for my time iam only human too...

Jeepsrule said...

We were pulling a large travel trailer with a gas GMC pickup and still traveled to spend time with family that year! Now we full-time in our Diesel Pusher and prices will not slow us down this summer.

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